News•May 8, 2026
My S&P 500 Forecast for 2026
The S&P 500 has delivered roughly 6‑7% annual earnings growth over the past four decades, but its valuation has surged to a PE of 26 and a CAPE of 36—well above historical norms. The author argues that such elevated multiples are unsustainable and predicts a mean‑reversion to a CAPE of about 19, which would push the index down to roughly 3,800 by the end of 2026. This scenario implies a potential 47% decline, highlighting the risk of investing at current levels despite AI‑driven optimism.
